A bipartisan bill that would freeze the estate tax at the level that will prevail in 2009 under the current law has been introduced in the Senate.

The legislation, S.3284, was introduced July 17, 2008, by Sens. Tom Carper (D-DE), Patrick Leahy (D-VT) and George Voinovich (R-OH). The bill would create a lifetime estate tax exemption of $3.5 million, indexed for inflation, and impose a top tax rate of 45 percent.

“I believe our bipartisan approach to fixing the estate tax problem is a fair way of handling the issue and would cost roughly three-fifths as much as legislation making the repeal permanent,” Sen. Carper said. “Rather than giving up on finding a solution to the estate tax dilemma, I hope other senators will see our proposal as an acceptable middle ground.”

Under the legislation, only two estates out of every 1,000 would be subject to the estate tax, according to Carper’s office. That amounts to 11,000 estates by 2012. By comparison, 50,000 estates were taxed in 2001 when the tax started being phased out.

Two days earlier, Rep. Jim McDermott (D-WA) introduced an estate tax reform bill in the House.

H.R. 6499 would freeze the current $2 million estate tax exemption and impose other reforms, including providing for estate and gift tax reunification by permitting lifetime gifts up to a maximum of $2 million rather than the $1 million gift tax limit under current law.

Under the Economic Growth and Tax Reconciliation Act of 2001, the estate tax will expire for the year 2010, followed in 2011 by an individual exemption of $1 million and a top tax rate of 55 percent, unless Congress acts in the interim.

A link to the Senate bill can be found here – Senate Bill

A link to the House bill can be found here – House Bill